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Bitcoin and Ethereum prices could rise thanks to central bank liquidity injections, says macro analyst Benzinga

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Benzinga – Bitcoin Investor Preston Pysh and macro researcher Luca Gromen recently explored how central banks’ moves to manage liquidity are impacting the financial and cryptocurrency markets.

What happened: In a discussion titled “Macro Outlook Q2,” Pysh and Gromen highlighted a significant issue: Long-term Treasuries are in a bubble, driven by retail trading and banks that have been awash in it “over the past 3-5 years ”, according to Gromen.

He pointed to this as a classic bubble signal. They also explored how current liquidity injections are not labeled quantitative easing (QE), but have similar effects. Gromen argued that these measures could weaken the dollar, spur economic growth and limit Treasury yields.

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Because matter: These points have substantial implications for cryptocurrency investors:

  • Inflation and liquidity management:

    While the Fed hasn’t labeled it QE, it is actually injecting liquidity into the economy. “This is not QE, but the markets react in a similar way,” Gromen stressed. Liquidity increases assets, including Bitcoin (CRYPTO: BTC) e Ethereum (CRYPTO: ETH), as investors seek returns in investments that are less sensitive to inflation.

  • Dollar weakness:

    Gromen highlighted the recent weakening trend of the dollar. “We’ve seen the DXY index drop about 2.4% since April,” she said. A weaker dollar often encourages investors to look to alternative assets like cryptocurrencies for better returns.

  • Political and economic strategies:

    The podcast discussed how political and financial institutions are addressing the high supply of Treasury securities. Gromen stressed: “They won’t let yields go above 5%.” This strategy involves continuous liquidity support, which can drive cryptocurrency prices higher.

  • Future liquidity injections:

    Experts discussed possible future steps, including Freddie Mac’s proposal to guarantee second mortgages, potentially injecting significant liquidity into the consumer market. “This could inject up to $1.8 trillion in liquidity,” Gromen noted, pointing to further boosts for assets like cryptocurrencies.

  • For cryptocurrency investors, the key takeaway is that persistent liquidity injections and a weakening dollar could create a favorable environment for cryptocurrencies.

    What’s next: Bitcoin’s influence as an institutional asset class is expected to be explored in depth at Benzinga’s upcoming Future of Digital Assets event on November 19.

    Read next: Dogecoin Could Hit $0.322 If It Breaks This Key Resistance Level, Analyst Notes

    This content was partially produced with the help of artificial intelligence tools and was reviewed and published by Benzinga editors.

    Image created using artificial intelligence with Midjourney.

    © 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

    Read the original article on Benzinga



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